This blog post is inspired by a research project that my team at Manchester Business School conducted to help a digital marketing agency

The Good.

During our research, we looked at various players in the interactive promotions industry who have invested heavily in technology. Players like Wildfire, Vitrue, Buddy Media, Strutta, Offerpop and many others have addressed the problem by providing products for brands and agencies. The advantages associated with a software as a service (SaaS) based interactive promotional offering (polls, contests, sweepstakes and UGC apps) for marketers and agencies, are that they are easy to implement, simple and cost efficient. Additionally, they can help marketers in bringing some of the core marketing and PR activities in-house or to a single corner, helping brands to have more control over the message they are trying to send across to their communities. Finally, SaaS-based products are great for repetitive simple task, such as rolling out contests, polls and sweepstakes that drive more engagement within their communities, without the burden of a technology implementation and a specialised agency. These services will be ideal for many small-to-medium businesses, with smaller marketing budgets and also great for brands that are just starting out to experiment with Facebook and other social platforms.

The Bad.

The market for SaaS-based services is fairly large, as these services are focussed on the high volume, low value market. However, there are distinct disadvantages to this model. The agency business and a brand’s online presence cannot be commoditised. Brand marketing is build on the premise of engaging consumers with campaigns that are custom-built and focuses on the brand’s individual persona. As such, as a brand matures on social media, they will want to differentiate and engage their customers in new ways. On any technology platform, new, engaging and relevant use of technology that adds value to the consumer and provides a great customer experience will clearly be the winners. And this is where I think, SaaS-based platforms will face the biggest hurdle. As brands mature on Facebook and Twitter, and they have walked the initial mile on social media, the relevance of SaaS will diminish, as brands try to have their own unique voice and their unique presence, which will define the customer experience for that particular brand.

But, it is not that Ugly.

Easy to deploy apps as I mentioned, will be great for brands and agencies, which will help them reduce costs. But the decision to use a technology platform providing undifferentiated services, as opposed to leveraging the services of a creative agency, is a tough nut to crack. I foresee costs and marketing budgets, as major factors in this decision making process. For a marketing agency, to build a SaaS-based platform for basic promotions, will require an investment up-north of $100K. The decision to use an external vendor’s SaaS product as opposed to building capabilities in-house will depend on various factors, including the customer mix, the part of the social media journey where the agency adds value to a brand (walking the first mile, as opposed to managing the brands social presence), the cost structure of the company, and the technology skillset available in-house.

Taking a close look at different customer segments for a digital marketing agency, we can start to see building in-house SaaS-based capabilities might not be a good idea. Many of their customers (think bigger brands), who have already built a strong presence on social media, have a huge amount of fans on Facebook and are now looking to engage these fans. Agencies with strong in-house creative talent can help many of the bigger brands in managing their community on social media, meaningfully, adding value and utility to the end consumer, and help provide great consumer insights. However, for small to medium business customers, who are still in the exploration phase on social media, agencies can partner with some of the SaaS-based players (such as Wildfire), to reduce the cost of their campaigns and deliver great quality services, which will help in lead generation and building a fan community.

The different needs of customers, across a typical marketing funnel can be addressed and agencies can help their customers in their journey on social (from awareness to loyalty and referral) using the suggested approach.